By John Helmer, Moscow

As larger cargo volumes and more international vessels move through Arctic waters, or the Northern Sea Route as the passage is generally called in Russian (SMP is the cyrillic acronym, NSR in English), the Kremlin’s strategy is to fund the construction of the most powerful nuclear icebreakers in the world, and ensure they dominate future navigation and convoys. These vessels are very expensive to build and to operate, however. So costly that just a few days of extra time navigating the icepack could eliminate the cost advantage which the Northern Sea Route is currently advertising over the Suez Canal alternative.

Because of the lack of ports along the Arctic shores, and tight beam and draught limits for vessels to navigate the eastern Laptev and Sannikov narrows, ten new Russian navigational and emergency centres will be installed over the next decade to bring the new traffic under Russian supervision and regulation. But there are technical problems with the maintenance of hundreds of strontium-90 powered navigational beacons installed along the coast line. Customs, coast guard, and special forces units are also being reinforced and tested to give the Russian regulatory authorities teeth to react to what the Kremlin considers foreign territorial or commercial threats. Ironically, according to one Moscow source, the satellite imaging used by the Russians to identify and navigate around thick ice concentrations is Canadian, not Russian.
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by John Helmer - Thursday, September 5th, 2013
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By John Helmer, Moscow

Evraz, the steelmaking group owned by Roman Abramovich and Alexander Abramov, has revealed that it cannot complete the sale of its South African steel subsidiary, Highveld Steel & Vanadium, on time, and that the South Africans are the reason for the fresh delay.

At the same time, Russian Foreign Minister Sergei Lavrov told his South African counterpart, Maite Nkoana-Mashabane, in Moscow on Monday that the Kremlin wants to see less delay, more commitment from President Jacob Zuma on buying nuclear power reactors from Rosatom. Zuma, who has now arrived in St. Petersburg for the G-20 summit meeting, has met President Vladimir Putin twice already this year – in Durban in March, and in Sochi in May – and on each occasion the official communiques have pledged the same thing. Lavrov repeated this on Monday when at a press conference with Nkoana-Mashabane, he said Russia’s priority in its bilateral relationship with South Africa is the billion-dollar sale and purchase of reactors. “Russia is ready to assist in the creation in the Republic of South Africa of nuclear power,” Lavrov said. This, Lavrov emphasized, is the priority in “the complex of bilateral ties…further steps for implementation of these major arrangements…[and] the activization of investment cooperation.”
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by John Helmer - Thursday, September 5th, 2013
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By John Helmer, Moscow

Sovcomflot, the state-owned Russian tanker company, has reported that its vessel operating profit collapsed from $101.7 million to just $31.7 million in the six months to June 30, while on the bottom-line the company reported a net loss of $14.5 million; this compares with a profit of just $2 million in the first quarter, and a profit of $51 million in the first half of 2012. This is the first loss ever booked in Sovcomflot’s audited reports.
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by John Helmer - Tuesday, September 3rd, 2013
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By John Helmer, Moscow

After months of delay, Victor Pinchuk’s Interpipe group revealed in its financial report for last year — issued at the start of August but given a release date of May 23 – how much financial trouble the Ukrainian pipe and steelmaker is now facing. The impact of this on the international art market is about to be felt in art auctions scheduled for later this month and in October in London and New York. That’s because Pinchuk’s record-priced acquisitions of two artists, Englishman Damien Hirst and American Jeff Koons, have created an overhang of their works in the market place. According to speculation by London and New York art dealing sources, these works may be forced into sale at a heftier discount than Hirst and Koons have already been taking.

Art market reports show that sales by Hirst have dropped from $45.8m in 2008 to $18.3m in 2012 – and that doesn’t count the volume of works failing to sell at all. Since then, according to the New York Times, Hirst works are fetching 60% less than was originally paid for them. To reduce the supply, Hirst’s production company Science Ltd. has issued a catalogue itemizing one line of purportedly authentic works and inviting owners to apply to Hirst for an authenticity check.
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by John Helmer - Monday, September 2nd, 2013
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By John Helmer, Moscow

On December 7, 2012, Andrei Melnichenko (image right, right) told prospective buyers of $750 million in loan participation notes that he was gung-ho on the future of the potash business of his Eurochem group. For Eurochem — 92% owned by board chairman Melnichenko; 8% by chief executive Dmitry Strezhnev – potash was, still is, a brand-new line of business. But in a decade or so, Melnichenko told investors, he aimed to be number-1 for potash in Russia and in Europe; and for potash, nitrogen and phosphate fertilizers combined, close to number-1 in the world.

Apparently nothing stood in his way – not Uralkali, Russia’s current potash monopoly producer; nor Suleiman Kerimov (left, left), the control shareholder of Uralkali. Not Belaruskali, the state-owned potash monopoly of Belarus, nor Belarus President Alexander Lukashenko. Those four names don’t appear in the risk or strategy sections of Melnichenko’s investment prospectus, a copy of which has just fallen from a Eurochem truck. How he proposed to defeat such rivals the Eurochem prospectus didn’t even acknowledge as a problem. Can Melnichenko have been so unthinking as to expect his rivals to surrender their market positions and profits without a fight? Did Melnichenko take his bond buyers for dolts and boobies?
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by John Helmer - Sunday, September 1st, 2013
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by John Helmer - Sunday, September 1st, 2013
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On August 24, 1991, Marshal Sergei Fyodorovich Akhromeyev committed suicide. He had returned from his holiday at Sochi responding to the attempted removal of Mikhail Gorbachev from power. According to the reports of the time, he hanged himself in his Kremlin office, leaving behind a note. One version of what it said was: “I cannot live when my fatherland is dying and everything that has been the meaning of my life is crumbling. Age and the life that I have lived give me the right to step out of this life. I struggled until the end.”

by John Helmer - Thursday, August 8th, 2013
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By John Helmer, Moscow

Sergei Lavrov, the foreign minister of Russia for the past nine years, is almost as well-known for rushing to the rescue of Russian companies in trouble in Africa, as the payback for the favour is unknown. Still, the Lavrov Doctrine is the first major change to have been introduced in the Kremlin’s foreign policy in Africa since the collapse of the Soviet Union.

In the old days the Soviet strategy was one of non-intervention in the internal affairs of the African states. The strategic meaning was that Moscow opposed arms deliveries, bush wars, assassinations, putsches, economic threats and bribery operations by the competing colonial powers and superpowers – the British, French, Americans, Portuguese, Belgians. The Russian Foreign Ministry reiterates this non-intervention doctrine from time to time. In Nigeria, for example, it has had the effect of allowing the local navy to take Russians hostage with impunity, and for the courts to rule punitively against local Russian investments.
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by John Helmer - Wednesday, August 7th, 2013
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By John Helmer, Moscow

It is quite clear that the Russian Government objects to an international agreement to stop fishing for the Antarctic toothfish in the Ross Sea region of Antarctica. What is far from clear is why.

On the surface, the Russian fleet caught just 522 tonnes of the species from the Ross Sea last year; at the current wholesale price of between $10 and $11 per kilogram – and depending on how the fish is labelled in Japanese and American markets – that may be worth between $5 and $6 million. That isn’t much, but it may be a lot of money for the small Russian fishing fleets operating in the area. Commercially, it is dwarfed by the pollock catch of Russia’s fareastern fishing fleet in the North Pacific. In a 2011 study of Russia’s wild fish catch by the Foreign Agricultural Service of the US Department of Agriculture, it was noted that growth in the annual volume of the catch has been rapid, but toothfish wasn’t even mentioned. According to the official Antarctic catch data, in that year Russia took just 455 tonnes of toothfish – 11% of the total Antarctic toothfish volume, but an infinitesimal fraction of Russia’s wild fish catch worldwide.
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by John Helmer - Wednesday, August 7th, 2013
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By John Helmer, Moscow

Uralkali, Russia’s potash monopoly, has been spending heavily for months – more than $1.3 billion — not so much to buy back its free-floating shares, as to let its control shareholders escape. The cash has come from new bondholders and from state banks, Sberbank and VTB. Bank of America Merrill Lynch and Goldman Sachs have played along helpfully, too.

Since Tuesday, July 30, we know why. That’s the day Uralkali announced to the rest of its shareholders that it was leaving the Belarusian Potash Company (BPC), the long-time export joint venture with Belaruskali, the Belarusian producer, and abandoning production and marketing control in order to support the potash price above $400 per tonne. In short, bye bye BPC — hello potash at $200 per tonne.
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by John Helmer - Monday, August 5th, 2013
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